Renminbi Pressure Indicator Growth Hits Record High for Two Consecutive Months

Renminbi Pressure Indicator Growth Hits Record High for Two Consecutive Months

May 22, 2007

    SHANGHAI, May 22 /Xinhua-PRNewswire/ -- Xinhua Finance
Limited and and the Milken Institute today release the
media update on the Renminbi Pressure Indicator. 

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
)

    Indicator Value Change

    February 2007: 200.1
    January 2007: 196.6
    Month-to-month change: 1.75%
    January 2006: 178.6
    Year-to-year change: 12.04%


    Please visit
http://www.xinhuafinance.com/en/charts/ipo_rpi/0705/rpi_chart1_b.jpg
to download the chart. 

    Highlights 
    In February 2007, the Renminbi Pressure Indicator (RPI)
score increased by 1.75 percent, the largest month-to-month
increase since the initial revaluation in July 2005.
China's foreign exchange reserves rose to US$1.16
trillion.

    Analysis 
    The gain in the RPI, from 196.6 to 200.1 over the
previous month is attributable to appreciation of the yuan
and an increase in foreign exchange reserves, which rose
nearly US$52.7 billion from January, making it the
highest-ever month-to-month jump in terms of absolute
dollar amount. In percentage points, China's foreign
exchange reserves showed the greatest gain since December
2004. The yuan appreciated against the dollar at a rate of
0.47 percent, up from 0.40 percent in January, while growth
in foreign exchange reserves rose to 4.77 percent, from 3.60
percent. Yuan appreciation accounted for 0.16 of the 1.75
percent growth in the RPI, while growth in reserves
contributed the remaining 1.59 percentage-point increase.
There was no change in domestic interest rates in February.
(In March and April 2007, the month-to-month growth rate of
yuan appreciation against the dollar slowed to 0.07 percent
and 0.04 percent, respectively. Interest rates increased by
0.27 percent in March and remained unchanged in April.) 

    Methodology 
    The RPI is based on a monthly examination of the
interaction between the following variables to compute
overall cumulative exchange rate pressure: the percentage
change in the spot exchange rate, the percentage change in
foreign exchange reserves, and the change in domestic
interest rates. 

    The indicator measures the pressure on China's currency
relative to the U.S. dollar. It is set equal to 100 on
January 1, 2000. Increases in the RPI reflect appreciation
pressure on the renminbi (RMB). 

    Xinhua Finance/Milken Institute China Indicators 
    The Xinhua Finance/Milken Institute China Indicators
are aimed at providing investors, analysts, and financial
professionals deeper insight into China's money and capital
markets. Five of the eight indicators have been launched
since November 2006: the Renminbi Pressure Indicator, the
Chinese IPO Indicator, the Market Adjusted Debt (MAD)
Indicator, the Banking Strength Indicator (BSI), and the
Adjusted Trade and Finance (ATF) Indicator. The remaining
three indicators will be launched later this year.

    Time Period Coverage and Frequency
    The indicator covers the period from November 30, 1980,
through January 2006. Data are available from the Milken
Institute upon request. There will be a two- to four-month
delay in reporting values for the indicator, depending on
the release of information from authorities in China. 

    Sources of Data 
    The data used in the construction of the indicator are
obtained from the International Monetary Fund, People's
Bank of China, and State Administration of Foreign
Exchange. 

    To view additional information, visit
http://www.xinhuafinance.com/indicators and
http://www.milkeninstitute.org/chinaindicators. 

    Xinhua Finance Limited is China's premier financial
information and media service provider and is listed on the
Mothers Board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY). Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through five focused and
complementary service lines: Indices, Ratings, Financial
News, Investor Relations, and Distribution.  Founded in
November 1999, the Company is headquartered in Shanghai,
with offices and news bureaus spanning 14 countries
worldwide.

    The Milken Institute is a nonprofit, independent
economic think tank whose mission is to improve the lives
and economic conditions of diverse populations around the
world by helping business and public policy leaders
identify and implement innovative ideas for creating
broad-based prosperity. The Milken Institute has extensive
expertise in China and conducts ongoing research on China's
banking and capital markets. It is based in Santa Monica,
Calif. For more information, please visit
http://www.milkeninstitute.org .


    For more information, please contact:
 
    Xinhua Finance
    China
     Ms. Joy Tsang
     Tel:   [phone] or [phone]
     Email: [e-mail]
 
     Mr. Scott Zhang
     Tel:   [phone]
     Email: [e-mail]
 
    Japan
     Mr. Jiong Sun
     Tel:   [phone]
     Email: [e-mail]
 
    Taylor Rafferty (Media contact for Xinhua Finance)
    Japan
     Mr. James Hawrylak
     Tel:   [phone]
     Email: [e-mail]
 
    United States
     Mr. John Dudzinsky
     Tel:   [phone]
     Email: [e-mail]
 
    Europe
     Faisal Kanth 
     Tel: [phone]
     Email: [e-mail]

    Milken Institute
     Ms. Jennifer Manfre
     Associate Director of Communications
     Tel:   [phone]
     Email: [e-mail]